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Operation Little Guy: How TMS Can Help You Become a Fully Delegated Lender

If you ask any salesperson whether they’d prefer to have a big client or a little client, they’d probably do a dramatic double-take to check if you were serious. Upon finding that you were, they’d say, somewhat incredulously, “A big client, of course. Big clients are worth more, so they deserve more of my energy.”

We can’t necessarily argue with that logic, but we know that the picture is more complex than that. Certainly, we focus on the big guys, but we have long grown our correspondent lending business by focusing on little guys — many of whom we have helped become big guys. Even in the midst of a historic refi boom, we firmly believe in the value of our smaller clients.

After more than a decade of experience with smaller clients, we have accrued an enormous amount of experience helping them maximize their potential. Whether you’re a broker looking to become a banker, a non-delegated lender looking to become fully delegated, or a small delegated lender looking to grow, we have helped others through those very processes and can extend our experience and knowledge to your situation as well.

Admittedly, becoming a strong delegated lender isn’t simple. But unfortunately, businesses with the ability to make it happen interpret that complexity to mean it’s impossible. Nothing could be further from the truth. To help drive this point home, we will outline the benefits of becoming a delegated lender, explain what you’ll need in order to make the conversion, and bust a few pesky myths that surround delegated lending. As ever, our success depends on yours — we’re here to help you maximize your potential.

Why Should I Become a Delegated Mortgage Lender?

To put it simply: Being a solid, efficient delegated lender means you can make more money. When you’re non-delegated, you’re at the mercy of whoever receives your loans. Delegated lending allows you to control the transactions, which, if done effectively, can increase your per-loans profit margin. Delegated lending also allows you to control your turn times, which means speedier closings and fewer loan overlays. Over time, this means you can close more loans, spending less time and less money on each closing. Also, going delegated is not an all-or-nothing thing — you can go loan-by-loan, and choose what works best for you.

Transaction control is a great loan officer (LO) recruiting tool, and can help drive up your realtor referral business. Likewise, because you’re setting your own lending terms, delegated lending allows you to expand your credit box, broadening the universe of loans that are available to you.

It might sound strange to recommend focusing on anything other than refi right now, since refi seems like such a sure thing, right? Well, definitely, for the moment, refi is tempting, and inarguably profitable. But just as it has in the past, this refi boom will end at some point. And when it does, you won’t want to be scrambling for new lines of business. Putting these systems in place now will ensure that once refi slows down, you’ll be ready.

Fact vs. Fiction: Delegated Lending Edition

To become a delegated lender, you’ll need four major things:

  1. A warehouse line
  2. An underwriter
  3. Audited business financials
  4. Investors who work with newly delegated mortgage bankers

The little guys of the world are probably used to being told that these things are off-limits. They don’t have enough net worth, they don’t qualify for a warehouse line, nobody wants to work with them, etc. None of those statements — or any of the ones below — are true.

Myth #1: I need to be big to be my own delegated lender.

Not true. You can be as small as you want. You could fund $100 million with just ten people in your company.

Myth #2: I need a lot of net worth — and tons of cash.

Not always true. Certainly, the Wells Fargos of the world require hefty audited net worths to work with delegated lenders. But you’d be surprised — with as little as $500,000 net worth, and the right warehouse partners and investors, you could become a banker.

Myth #3: I need a ton of operations people — underwriters, funders, secondary guys, lock desk managers.

Not true. You can outsource a lot of these functions for much less cost than you can imagine. We can make introductions to outsourcing companies that have the necessary capacity, even in the middle of this refi boom.

Myth #4 I need to spend a fortune on technology to become a banker.

Not true. The same off-the-shelf inexpensive technology exists out there, and we know where it is.

Myth #5: I won’t be able to get a warehouse line — I’m too small, I’m not credit worthy, I don’t know where to start.

Not true. Not everyone is eligible for warehouse lines, sure, but getting one is much, much easier than people think.

Myth #6: I have to choose between going fully delegated or going fully non-delegated.

Not true. As we said, developing delegating lending capabilities doesn’t mean you have to do all your loans that way. You can still go non-delegated for certain loans if you want. It just gives you options.

TMS is Here to Help

Now that you understand the upsides, know what it takes, and can distinguish fact from fiction, you’re ready to embark on the broker-to-banker conversion process. A long-standing champion of the little guy, we have abundant resources at its disposal to contribute to your success.

A full third of all mortgage lenders work with us. We are a top 10 correspondent buyer, with over $80 billion loans serviced. Our customer focus has led to an extremely high NPS. We can point you in the direction of inexpensive outsourcing services to handle the nuts and bolts of delegated lending. We can help you understand how much capital you need, and exactly what you qualify for. Overall, we can develop a thorough picture of what your company is capable of, show you just how much you stand to gain by becoming a delegated lender, and assist you in making it a reality.

We would be happy to answer any questions you may have. Partner with us today to get started. 

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November 24, 2020